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Home Based Business Modelling

Sep 28th 2010 at 7:43 PM

The number of people fantasizing about leaving their jobs has been growing. In the present global recession scenario, this may be the only option for the unemployed. Lack of individual growth opportunities, rising uncertainties, stagnation and depleting work challenges have forced many to take to the internet as the only money making goldmine! It's a great relief to see more people turning polite from the earlier times of spam and lewd messages laden chat rooms.

But, the question is: How many people (will) succeed in operate-from-home business? Basically, one's business should be based upon a time-tested model if one is interested in a short-term approach or gain. Or one can even visualize a new business model for long-term gains. Now, the latter approach needs a huge capital, long period and high-risk taking but if successful, a mountain of money. If one explores into the background of successful enterprises, it would be apparent that they all had strong business models as their foundation.

According to Michael Rappa, "In the most basic sense, a business model is the method of doing business by which a company can sustain itself -- that is, generate revenue." He goes on to say, "The business model spells-out how a company makes money by specifying where it is positioned in the value chain." The word "value" is the keyword! A product or a service can fetch one a positive net income if there is value addition to it. Note that a value is very different from a price or cost. Some of categories of business models discussed by Rappa include: Brokerage, Advertising,Infomediary, Merchant, Manufacturer (Direct), Affiliate, Community, Subscription and Utility. First, determine your area of business. "Know your interests," cautions Elizabeth Miranda. She hits the nail when she says, "Before setting up a home based business, know what you can do and what you are good at ..." Things do not happen overnight!

A few examples will make the topic clear. The traditional business model adopted by shopkeepers even to this day is the store and sell model. Later, shopping chain model was pioneered by companies like Walmart. Multi-level marketing (MLM) followed in due course. These business models had a set of established policies, processes and procedures for duplication. A detailed manual for processes and ready-made formats for procedures ensured their certain, if not, rapid success. Coming to internet marketing, we have buy-sell-auction model of eBay. Amazon has its own style of buy-sell model. On the net, one will find "Freemium" and "Premium" models. In freemium, one has limited access to the features of the program tempting one to ultimately to reach out to the advanced features by paying the subscription fee. An auto-responder is a type of business model with its own drawbacks. Ever wonder why Yahoo (or others) started with free email? Once it's subscribed by many, it is a great avenue for advertising. Who pays for search engines? Google used this technology to capture a multitude of net-surfers with the long-term goal of earning from AdSense and AdWords. Examples are plenty! Not to forget, Twitter's owner, one day, will make billions.

So, before you take up home based business or not succeeding online, take time to model your business.